Weekly Market Update - 18 December 2023

Oracle Tumbles

Oracle shares plunged after the company reported slower cloud sales growth, stoking concern the software maker’s expansion into a competitive market isn’t panning out as expected. The sharply bearish reaction overshadowed a more positive message for tech: Demand is intact -- which is crucial for future earnings growth -- and the miss was driven in part by an AI chips shortage. Demand was so strong company executives opted for space metaphors to describe it, with CEO Safra Catz saying it’s rising at an "astronomical rate” and Chairman Larry Ellison saying demand was “over the moon,” as the company was building 100 new data centers. Catz said Oracle would have been able to recognize hundreds of millions of dollars more in quarterly cloud sales if capacity were available. Meantime, a lack of AI chips is unlikely to reverse course in the near term, according to Bloomberg Intelligence.

Source: Bloomberg

Clashes at Sea

Chinese and Philippine vessels faced off in multiple clashes in the South China Sea over the weekend as tensions continued to escalate between the two countries over maritime territory. The Philippines’ sea task force said vessels were damaged after being “directly targeted” by a Chinese coast guard ship with a water cannon. A Filipino boat was also rammed by a Chinese vessel, the task force said in a statement. China’s Coast Guard said the Philippine boat ignored warnings and “deliberately collided” with its vessel, which was sailing normally for law enforcement purposes.

Source: Bloomberg

Copper

The world’s supply of copper suddenly seems tight. A forecast surplus going into 2024 has all but disappeared. Instead, the mining industry is highlighting how vulnerable supply can be — whether due to political and social opposition, the difficulty of developing new operations, or simply the day-to-day challenge of pulling rocks up from deep beneath the earth.

Source: Bloomberg